After launching the app-based version of its Threads platform in July, Meta Platforms (META +2.48%) is now gearing up to debut the browser-based version of the social media service. According to a report from The Wall Street Journal, the new version of the service could be ready to debut as soon as next week.
Of course, it's not the only player in the microblogging space. Threads has primarily been positioned as a competitor to Elon Musk's X platform, which was known as Twitter prior to its recent name change.
Should investors be buying up Meta stock as the company readies its next big push for the Threads platform?
Gearing up for the next round in the Zuckerberg vs. Musk fight
Between social media jabs and a preliminary agreement for a mixed martial arts match at some point, Meta CEO Mark Zuckerberg and Tesla and X CEO Elon Musk have developed a captivating rivalry. It's hard to tell how much of the theatrical feud between the two tech luminaries is actually serious. But setting memes and potential haymakers aside, the competition between Threads and X is serious business.
Less than a year after Musk completed his $44 billion purchase of the company formerly known as Twitter, Meta rolled out its own microblogging social media platform. The Threads app was launched on July 5 and quickly made a splash.
NASDAQ: META
Key Data Points
The app managed to record more than 100 million signups within its first week on the market. But less than a month later, reports emerged suggesting that the platform had lost roughly 80% of its daily active users (DAUs).
Now, Meta Platforms is getting ready to inject some new life into the recently launched platform and help solidify it as a lasting competitor to X. Not only will the release of the web-based version of Threads likely provide a boost for user numbers and overall engagement on the platform, it should also make the platform more appealing for advertisers and brands.
Is Threads the reason to go all in on Meta stock?
Threads managed to quickly attract a sizable user base, and Meta certainly has the resources to sustain the platform to promote continued growth and expansion. It's possible that the social media platform will prove to be a lasting competitor to Musk's X service. On the other hand, that's far from a sure thing.
While Threads exploded out of the gate with very strong user growth numbers, subsequent performance was less inspiring.
As it stands right now, making Threads the centerpiece of a bullish investment in Meta probably doesn't make much sense. It's possible that the platform will evolve into a significant performance driver for the company, but the outlook on that front remains speculative.
Threads is a project that could have big payoffs, but Zuckerberg's company doesn't need to disrupt Musk's microblogging platform in order to deliver wins for shareholders.
META PE Ratio (Forward) data by YCharts
Meta Platforms is currently trading at roughly 21 times this year's expected earnings. Looking ahead a bit further, the social media giant is valued at about 17.5 times next year's expected profits. The stock isn't nearly as cheap as it was earlier this year, but its current valuation doesn't look unreasonable in the context of resurgent performance for the business.
Meta returned to posting double-digit sales growth in the second quarter, increasing revenue 11% year over year in the period. Profitability improved significantly as well, with net income jumping roughly 16% year over year to hit roughly $7.8 billion. Meanwhile, the company's total DAUs across Facebook, Instagram, WhatsApp, and other services rose 7% year over year in the June-ended quarter to reach 3.07 billion.
META Revenue (Quarterly) data by YCharts
Meta continues to look like a worthwhile investment for the long term. But on the heels of big gains for the stock and plans to begin ramping up spending again, investors may want to take a dollar-cost averaging approach to the stock rather than going all in with a single purchase.
